62 d Congress 
8d Session 


} 


SENATE 


Document 

No. 988 


Possibilities of a Democratic 

Administration 


By 


HON. FRANCIS G. NEWLANDS 

// 

UNITED STATES SENATOR FROM NEVADA 


FROM THE INDEPENDENT 

OCTOBER 3, 1912 




PRESENTED BY MR. SMITH OF GEORGIA 
DECEMBER 19, 1912.— Ordered to he printed 


WASHINGTON 

1912 





















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POSSIBILITIES OF A DEMOCRATIC ADMINISTRATION. 


By Francis G. Newlands, United States Senator from Nevada. 


I am asked to give an outline of the probable program of the Demo¬ 
cratic Party should it come into full power in the legislative and 
executive departments at the next election. I would not, of course, 
pretend to speak authoritatively upon so important a subject, but I 
have no objection to giving my individual views, based on the party 
platform and the general trend of Democratic thought as displayed 
in party deliberations and action in Congress. 

Revenue .—The first question to be considered is the national reve¬ 
nue, approximating $1,000,000,000, of which, roughly estimated, one- 
fourth comes from postal receipts, one-third from internal-revenue 
taxes on tobacco, spirits, etc., one-third from customs duties, and the 
balance from the corporation tax and other miscellaneous receipts, 
such as sales of public lands, etc. 

Of the existing taxes, therefore, the corporation excise tax (yield¬ 
ing a little over $30,000,000 annually) is the only tax that can be 
said to be levied upon wealth; and the revenue from this source 
equals less than one-thirtieth of the entire national revenue. 

Leaving out of consideration constitutional restrictions and ap¬ 
plying only fair dealing in the distribution of national burdens, it 
must be apparent that a system which fastens approximately 96 per 
cent of the burdens of the National Government practically upon con¬ 
sumption and less than 4 per cent on wealth is unjust, and should be 
corrected. Such correction should involve contemporaneous legis¬ 
lation reducing the tax on consumption and increasing the tax on 
wealth. The reduction will, necessarily, fall upon customs duties, for 
no change is likely to be made in the revenue from the postal service 
or the internal-revenue taxes on nonnecessaries, such as spirits and 
tobacco. All the tariff bills which have recently passed the House 
involved a net reduction in revenue of only $60,000,000, and that it 
is proposed to make up by the extension to individuals of the excise 
tax of 1 per cent on profits over $5,000 now imposed on corporations. 
It is probable that an income tax will be substituted for this when 
the pending constitutional amendment is adopted. It is safe to say 
that an income tax of 1 per cent will furnish sufficient revenue to 
take the place of the reduction in revenue caused by the contem¬ 
plated tariff legislation of the Democratic Party. I state this in 
order to disarm the charge that any confiscatory attack is possible, 
and to prevent lawless wealth from arousing the fears of law-abiding 
wealth, with a view to obtaining, as it has so often, the latter’s aid in 
political and legislative movements. Certainly a possible tax of $100 




4 POSSIBILITIES OF A DEMOCRATIC ADMINISTRATION. 

on an income of $15,000 ($5,000 being exempted) can not be consid¬ 
ered confiscatory. 

But it may be remarked that a reduction of only $60,000,000 in 
the burden oil consumption is trifling. The answer is that for every 
dollar of high protective duties collected by the Government it is 
estimated that about $10 is collected by the manufacturers in en¬ 
hanced prices. A reduction, therefore, of $60,000,000 in tariff duties 
means a reduction in the burden upon the people’s consumption of 
approximately $600,000,000. 

Why not. then, enlarge the area of relief by still further reductions 
in tariff duties? it may be asked. The answer is obvious. The re¬ 
duction from a protective to a low revenue basis, if suddenly made, 
will largely increase importations, and thus displace American prod¬ 
ucts in our markets and American labor in our industries. The 
Democratic Party is opposed to radical readjustments, and has de¬ 
clared its purpose to feel its way gradually and prudently toward a 
revenue basis. Realizing that the American industries have become 
interlocked with a high protective system, it has declared its inten¬ 
tion to accomplish its ultimate purpose in a way that will not impair 
or injure any legitimate American industry. In giving this assur¬ 
ance it will disarm the fear of the workers in the protected indus¬ 
tries, numbering several millions, who, naturally affiliated with the 
Democratic Party in sympathy, have been frightened by their em¬ 
ployers into voting against that party on the ground that its policies 
constitute a menace to their employment and their wages. We will, 
at the same time, disarm the fear of wealth that radical increases will 
be made in its burdens. If we reduce our revenues from customs 
duties slowly, there will be no reason for rapidly increasing the taxa¬ 
tion of wealth. By pursuing this policy we will avoid the hysterical 
outcry against needed economic changes, which has so often beaten us; 
we will pacify labor, the manufacturer, and law-abiding wealth, and 
we will steer clear of business depression and panic, than which noth¬ 
ing could be more prejudicial to our success either at the election or 
in subsequent control and administration of the Government. We 
must break up the habit of swinging like a pendulum from reform to 
monopoly through the intermediate process of panic. 

Budget committees and administrative boards .—When the Demo¬ 
cratic Party comes into power it will doubtless take up most seri¬ 
ously the question of legislative efficiency. With the growth of our 
country the work of Senators and Representatives has been greatly 
increased, both outside and inside the legislative halls. The sessions 
have lengthened, so that now they are almost continuous. The diffi¬ 
culty is that legislators attempt to cover too many details, and have 
not yet adopted methods of efficiency which have made such marked 
advance in business and corporate activities. In such activities the 
man of prominence largely succeeds through utilizing the brains of 
others and through the services of specialists. 

As a means of securing greater efficiency in Congress it would seem 
that the organization of a budget committee in each house of Con¬ 
gress is desirable. Such committee could act in cooperation with 
the executive department in matters relating to efficiency and econ¬ 
omy, and could make recommendations regarding apportionment of 
revenue between the different departments, services, and works of 
the Government. 


POSSIBILITIES OF A DEMOCRATIC ADMINISTRATION. 


5 


Much effort could be saved through the organization of adminis¬ 
trative boards or commissions of experts in aid of Congress. The 
impression seems to prevail among many legislators that the organi¬ 
zation of such boards involves the abdication or delegation of legis¬ 
lative power. The Interstate Commerce Commission is a powerful 
argument to the contrary. Doubtless the power to fix rates is a legis¬ 
lative power, but Congress, instead of exercising this power directly, 
acted wisely in organizing an administrative commission and fixing 
the rules under which this power should be exercised. This policy 
might well be extended in the organization of administrative boards 
for the continuous and systematic consideration of questions relating 
to the tariff, the trusts, the improvement of rivers, the construction 
of public buildings, and the adjustment of such questions, under rules 
fixed bv Congress. 

The trusts .—As to the trusts, it is difficult to say what will be done 
so far as additional legislation is concerned. The system of enforc¬ 
ing the Sherman law regarding interstate trade through the Attorney 
General’s office, with its shifting incumbencies and varying policies, 
has not been satisfactory, as compared to that of the Interstate Com¬ 
merce Commission in enforcing the laws regarding interstate trans¬ 
portation; and these experiences, it seems to me, constitute a control¬ 
ling reason for organizing an independent interstate trade commis¬ 
sion, which, regardless of political exigencies or executive or political 
influence, will insure the steady and continuous enforcement of the 
laws relating to trusts and monopolies. It is to be hoped, therefore, 
that Congress will supplement the Sherman Act by the organization 
of a nonpartisan, independent interstate trade commission, with 
powers of investigation, publicity, and recommendation to the Presi¬ 
dent and to Congress, and also with the power to aid the courts in the 
disintegration of monopolistic combinations and to act, independ¬ 
ently of the Attorney General’s office, upon complaint or its own 
initiative, in investigations with a view to bringing such combina¬ 
tions to justice where they fail to conform to the law. Such a com¬ 
mission would be entirely different from the one suggested by Messrs. 
Gary and Perkins. It would not regulate monopolistic combinations 
or fix their prices, but would either break them up or bring them into 
harmony with the law. Its work would be continuous, nonpartisan, 
uncontrolled by political emergencies, and would not be subject to 
the influences which from time to time have controlled the Attorney 
General’s office in all administrations. 

To existing legislation there will doubtless be added, as required 
by the Democratic platform, the declaration by law of the condition? 
upon which corporations shall be permitted to engage in interstate 
trade, including, among others, the prevention of holding companies, 
of interlocking directors, of stock watering, and the control by one 
corporation of so large a proportion of any industry as to make it a 
menace to competitive conditions. It would be advisable to intrust 
the enforcement of these conditions to the trade commission above 
referred to. 

Banking and -finance .—The Republican Party is practically com¬ 
mitted to a central banking and reserve association, organized after 
the analogies of England, France, and Germany. The party is ap¬ 
parently oblivious of the fact that in the near future many of our 
48 States will equal in population each of the countries referred to. 


6 POSSIBILITIES OF A DEMOCRATIC ADMINISTRATION. 

The plan of the National Monetary Commission, headed by Mr. 
Aldrich, makes the Nation the basic unit, and provides for branch 
associations, regardless of State lines. The Democratic Party in its 
platform has declared against the Aldrich plan, but fails to outline 
any specific legislation. It would seem advisable that the Demo¬ 
cratic plan should take the States as the basic units for organization, 
and then federate the State organizations for national action. All 
that is desirable in the plan of the National Monetary Commission 
can be secured by the organization, under national law, of a reserve 
association in each State, composed of both national and State banks, 
for the purpose of protecting their reserves and cooperating in the 
prevention of bank panics. Such State reserve associations could be 
brought into federation under national law by some form of national 
organization which would bring the various State reserve associations 
into cooperation for the prevention of bank panics and the interrup¬ 
tion of interstate exchange. The States should be encouraged to 
exercise their functions—not to turn them over to the National 
Government. 

Commerce may be divided into three branches—trade, banking ex¬ 
change, and transportation. The jurisdiction over that part of such 
commerce which is included within the boundaries of a State belongs 
to the State; the jurisdiction over that part of such commerce which 
exists between the States or a foreign nation belongs to the Nation. 
It is, therefore, incumbent that we should have State regulation as 
well as national regulation of trade, banking exchange, and transpor¬ 
tation. We have worked this out admirably regarding transporta¬ 
tion by the organization of a national railroad commission and State 
railroad commissions, which every day are coming into closer co¬ 
operation and harmony with each other. There is no reason why we 
should not similarly organize both State and national commissions 
for the regulation of banking exchange and trade, the State commis¬ 
sions to have jurisdiction over that portion which is embraced within 
the States and the national commission to have jurisdiction over that 
portion which is between the States and with foreign countries. In¬ 
stead of breaking down our whole scheme of government by permit¬ 
ting the greater sovereign to absorb and exercise the functions of the 
lesser sovereign, the true theory should be to insure the exercise of 
the functions of all the sovereigns under a system of cooperation 
that will insure harmony instead of discord. 

The military defense .—Under Democratic administration I have 
no doubt that high efficiency will be sought in our military defense. 
The idea is growing that the military defense should be regarded as 
a unit by uniting the Navy and Army in cooperation through a 
board consisting of distinguished Army and Navy officers, which 
board should be advisory to the President and to Congress. 

We could also aid in the establishment of an efficient militia in the 
various States through the cooperation of our Army, thus securing 
a discipline and drill that will develop a citizen soldiery able at any 
time to respond to the demands of war. 

The importance of having officers trained in drill, sanitation, and 
care of troops, to take direction of the citizen soldiery in case of war, 
has been demonstrated, and an increase in the military school at West 
Point with a view to meeting such requirements might well be made. 


POSSIBILITIES OE A DEMOCRATIC ADMINISTRATION. 7 

The graduates beyond those actually required for officering the regu¬ 
lar troops should be utilized, through some cooperative system, in 
training the militia of the various States. 

Our platform calls for a well-proportioned Navy. Such a navy 
should consist not only of fighting ships, but of the auxiliary ships 
necessary to aid the fighting ships in time of war. Such auxiliary 
ships could be used in time of peace as training schools for the Naval 
Reserves and in opening up new routes of foreign commerce under 
arrangements with shipping companies. 

The public domain .—The Nation under Democratic administra¬ 
tion will be regarded as the trustee of the public domain, holding the 
great natural resources in lands, water, timber, and minerals as trus¬ 
tee for the interests of the people of the respective States in which 
they are located. Democracy will guard these natural resources 
against combination and monopoly, but will also see that they are 
not withheld from development or too long exempted from contribu¬ 
tion to the revenues of the States within which they are situated. 

The rapidly approaching exhaustion of the public domain and the 
increasing difficulty which would-be settlers on the land find in secur¬ 
ing homes have created a condition which would seem to make it the 
duty of the Nation to take charge of the settlement of people on such 
lands. It is to be hoped that a homestead service will be created, 
with appropriate officials and machinery, for aiding settlers in finding 
homes on the land, instructing them how to make a living from it, 
and making the remainder of the national domain available to the 
people on conditions favorable to settlement and cultivation. 

The civil service .—The spoils system has been largely done away 
with in public service. The Democratic Party is committed to the 
completion of this work and to such organization of the civil service 
as will insure certainty of tenure, based upon merit and efficiency. 
Outside the Army and Navy the National Government has about 
250,000 employees. The Nation should be a model employer, and 
all the reforms relating to the relations of employer and employee 
which an intelligent public sentiment has forced upon corporate em¬ 
ployers should, so far as applicable, be applied to the civil service. 

Public works .—Under Democratic administration the merit sys¬ 
tem, which has proved so effective in promoting the efficiency of the 
civil service, will be extended to projects and works. The practices 
under which the apportionment of river and harbor improvements 
and public buildings are made dependent upon log-rolling rather 
than upon merit will be done away with. The platform calls for 
large and comprehensive plans for the development of our rivers, in 
cooperation with the States, and for continuous work, with an ample 
fund, under the direction of a board of experts in engineering and 
construction. 

The platform and the trend of public opinion indicate that the 
Nation will take up the question of the regulation of the flow of our 
rivers in a most effective way, supplementing bank and levee protec¬ 
tion below by the diversion and storage of flood waters above, and 
putting these flood waters to useful work in aid of the reclamation of 
arid and swamp lands and of water-power development. 

Investigations have been had by the Democratic committees of the 
House regarding the construction of our public buildings, and doubt- 


8 POSSIBILITIES OF A DEMOCRATIC ADMINISTRATION. 

less a systematic scheme will be presented embracing the organization 
of a bureau of public buildings, which will take them out of the spoils 
system and apply the test of adaptability to locality and use, based 
upon public necessity. Our public buildings should be memorials of 
the culture of our time, and in every form of construction regard 
should be had for art as well as utility. The National Commission 
of Arts, recently created, will probably be brought into cooperation 
with this bureau as an advisory organization, with a view to securing 
a proper system of artistic construction. 

- All these public works should be conducted continuously through 
the creation of funds in the Treasury for that purpose, and without 
the breaks in construction heretofore experienced through political 
change and financial exigency. 

It is possible that all these constructive works will require an ex¬ 
penditure of from $50,000,000 to $100,000,000 more annually than has 
heretofore been expended for these purposes. If the funds can not 
be secured by administrative economy, it may be advisable to levy 
a graduated inheritance tax for such purpose, such tax being now 
available without constitutional amendment. If so, it would be wise 
to place the proceeds of this tax in a special fund for constructive 
work. The objection that the States are now imposing this tax can 
be met by providing that a reduction, not exceeding one-half, may 
be made in States deriving a portion of their revenue from inherit¬ 
ance taxes. Such a provision would have a tendency to produce 
uniform inheritance taxes throughout the States, and to prevent cer¬ 
tain States from offering refuge to the wealthy from the imposition 
of so just a tax. 

Social justice .—The Democracy can be relied upon, so far as the 
national powers will permit, to seriously consider the questions which 
of late years have so engrossed the public mind relating to social 
justice, including all questions relating to the withdrawal of privi¬ 
lege, to the imposition upon wealth of a fair proportion of public 
burdens, and to the just obligations of collective capital to collective 
labor. It has already favored liberal legislation upon these lines in 
matters relating to the employees of carriers engaged in interstate 
transportation, and doubtless it will extend the same to the large 
body of civil-service employees, in its relation with whom public 
opinion demands that the Government should set an example of jus¬ 
tice and humanity to all other employers. 

The United States should extend its system of education in agri¬ 
culture and the industrial arts to all forms of useful vocations by a 
system of cooperation in the establishment of schools which will 
serve as models for vocational training. 

Much can be done to add to the comfort and happiness of the 
people by accurate and scientific investigation of all the problems 
relating to the advancement of farming, the development of educa¬ 
tional and social facilities in connection with farm life, good roads, 
good housing and good housekeeping, the planning of cities with a 
view to the general comfort, health, and recreation, the democratiza¬ 
tion of art, and many other problems that relate to social advance¬ 
ment. While these matters are more directly within the province of 
the home government of the States, much can be done in a cooper 
ative way by the Nation. The Agricultural Department, whose ex- 


POSSIBILITIES OF A DEMOCRATIC ADMINISTRATION. 


9 


penditures have been more directly beneficial to the people than those 
of any other department, furnishes an example of what can be done 
in a national way by cooperation of the Nation with the States. 
Washington should be the clearing house of the various State asso¬ 
ciations, organizations, and instrumentalities designed for social ad¬ 
vancement and the solution of great constructive policies. The 
National Government should not attempt to absorb in any degree 
the functions of the States. Its aim should be so to interlock its 
activities with those of the States as to stimulate the exercise of local 
functions. The opportunity is offered to a constructive Democracy, 
through the cooperation of the Nation with the States, to put in 
legislation all that is desirable in collectivism without impairing the 
sturdy individualism upon which our institutions rest. 

The advanced position which Woodrow Wilson has taken upon all 
these questions during his administration of the gubernatorial office 
in New Jersey and the marked favor with which his record has been 
indorsed by the Democracy of the country indicate that Congress 
will cheerfully supplement his efforts for the promotion of social 
justice. 


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